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Wednesday, 29 April 20
OIL CLOSES IN ON PEAK OVERSUPPLY - WOOD MACKENZIE
Are we now deep in the abyss? Up to our necks in it, if the oil price is any guide. Brent has now tested sub-US$20/bbl in this downturn and WTI sub-zero, albeit briefly and in somewhat freakish circumstances. Where are the signs of stress across the oil value chain? And what are the prospects of finding an exit route to recovery? I talked it through with Ann-Louise Hittle of our Macro Oils team.
First, oil demand, which we think may be close to bottoming out. Decline has been sharp and deep as Covid-19 takes its toll on global economic activity. Much of the world is currently in lockdown, with more than 65% of the world’s population under travel restrictions. Global air travel and car use have nosedived in many countries. The big hit has been on jet fuel demand (down 50% year-on-year) and gasoline (down 25%). Diesel and fuel oil – used to transport goods by truck, ship and rail – have held relatively steady.
The net effect will be April’s demand falling by an average of 15 million to 18 million b/d year on year, based on the early April forecast from our Macro Oils Service. It’s a big number but may be bigger still on certain days or weeks in April and May. Some estimates have suggested declines of 20 million b/d or more.
A key question is when the global economic recovery that’s needed to kick start oil demand growth again will begin. Right now, we appear to be in limbo. India, France and the UK, among other big economies, have extended lockdowns into May. Italy, Spain, Austria and others have started to ease restrictions while several US states are considering re-opening in May. There are early signs of US gasoline demand stabilising.
China though is the model to watch as it emerges from lockdown. It has already started ratcheting up crude purchases in April to supply a reviving economy.
Second, inventory is building at superfast rates globally. Cushing, Oklahoma, is a microcosm of the wider picture. Oil prices in Texas have incentivised producers to send crude to the Cushing hub; weak demand from refineries in the Mid-West and Gulf Coast have kept it there. Storage tanks are filling up rapidly – the three largest weekly builds on record were in consecutive weeks from late March, based on Genscape’s proprietary twice-weekly tank monitoring.
Cushing’s tightening storage capacity played a central role in WTI’s ignominious dive into negative prices on 20 April, ahead of the May contract expiry. Traders and financial players were effectively ambushed – having to pay counterparties up to US$37/bbl to roll out of their expiring May contracts and into June.
Storage globally will stay tight so long as oversupply persists. Genscape estimates Cushing‘s spare capacity of up to 15 million b/d will be full within weeks, and other landlocked hubs – the Caspian for one – are in a similar position. But in reality, producers everywhere are worried their crude won’t be able to find a home.
Third, the world is still awash with supply, which unlike demand is still close to pre-crisis levels. Low prices have killed off new investment but have not yet had much impact on production. So far, we estimate barely one million b/d of onstream non-OPEC production has been shut in.
These are sizeable volumes but, given the scale of the market oversupply, insignificant. We estimate over 15 million b/d of production generates negative operating cash flow, now that prices have lurched lower. As storage fills up, more wells and fields will be shut-in during the coming weeks. Curtailed volumes will quickly mount up.
What must happen for the oil market to start rebalancing and prices to recover? May is important for supply, with OPEC+ cuts taking effect and removing up to 7 million b/d from the market by the end of the month. We expect a slow return to “normal” life in H2 2020 to help demand recover, though most likely staying below pre-crisis levels.
A strong bounce in demand as the world emerges from recession will be needed to soak up the overhang of inventory, which threatens to reach record levels by summer. Nothing, however, can be taken for granted while coronavirus still poses a threat to economic – and social – activity.
Source: Wood Mackenzie
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Wednesday, 06 May 20
KOSPO INVITED COAL BIDS FOR LOW CALORIFIC VALUE COAL
COALspot.com: Korea Southern Power Co., Ltd. (KOSPO) has issued an International tender for 160,000 Metric Tons (MT) Low Calorific Value Coal for J ...
Wednesday, 06 May 20
COST CHALLENGES IN A US$20/BBL WORLD - WOOD MACKENZIE
A new approach is needed to ensure supply sector resilience
How will US$20/bbl affect the oil and gas supply chain?
It’s going to g ...
Wednesday, 06 May 20
MARKET INSIGHT - INTERMODAL
It comes as no surprise that activity in the dry bulk SnP market remains soft, with asset values caught in the downward spiral generated by the Cov ...
Wednesday, 06 May 20
FLOATING STORAGE OF OIL CARGOES - STANDARD CLUB
KNOWLEDGE TO ELEVATE
Due to a combination of circumstances there is now a worldwide shortage of storage space ashore for both unrefi ...
Wednesday, 06 May 20
IRON ORE TRADE REMAINS REMARKABLY RESILIENT THIS YEAR, AT LEAST IN ASIA - BANCHERO COSTA
Iron ore trade remains remarkably resilient this year, at least in Asia, despite the global economic impact from COVID-19. In the first 4 months of ...
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- Vijayanagar Sugar Pvt Ltd - India
- ICICI Bank Limited - India
- GMR Energy Limited - India
- SMG Consultants - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Semirara Mining Corp, Philippines
- Eastern Coal Council - USA
- Medco Energi Mining Internasional
- Kartika Selabumi Mining - Indonesia
- Toyota Tsusho Corporation, Japan
- Videocon Industries ltd - India
- India Bulls Power Limited - India
- Chettinad Cement Corporation Ltd - India
- Global Green Power PLC Corporation, Philippines
- Mjunction Services Limited - India
- IHS Mccloskey Coal Group - USA
- Economic Council, Georgia
- Sarangani Energy Corporation, Philippines
- Standard Chartered Bank - UAE
- Therma Luzon, Inc, Philippines
- Africa Commodities Group - South Africa
- New Zealand Coal & Carbon
- Petron Corporation, Philippines
- PTC India Limited - India
- Orica Australia Pty. Ltd.
- Maharashtra Electricity Regulatory Commission - India
- Energy Development Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Agrawal Coal Company - India
- Meenaskhi Energy Private Limited - India
- Renaissance Capital - South Africa
- Simpson Spence & Young - Indonesia
- Bangladesh Power Developement Board
- Larsen & Toubro Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jaiprakash Power Ventures ltd
- Bharathi Cement Corporation - India
- Deloitte Consulting - India
- PNOC Exploration Corporation - Philippines
- Baramulti Group, Indonesia
- European Bulk Services B.V. - Netherlands
- Lanco Infratech Ltd - India
- Bulk Trading Sa - Switzerland
- Petrochimia International Co. Ltd.- Taiwan
- Rashtriya Ispat Nigam Limited - India
- Straits Asia Resources Limited - Singapore
- LBH Netherlands Bv - Netherlands
- Minerals Council of Australia
- Ceylon Electricity Board - Sri Lanka
- Bhoruka Overseas - Indonesia
- Rio Tinto Coal - Australia
- Port Waratah Coal Services - Australia
- Coalindo Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Savvy Resources Ltd - HongKong
- Borneo Indobara - Indonesia
- Thiess Contractors Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Globalindo Alam Lestari - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Trasteel International SA, Italy
- Posco Energy - South Korea
- Siam City Cement - Thailand
- Ministry of Mines - Canada
- Oldendorff Carriers - Singapore
- Cigading International Bulk Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- TeaM Sual Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- Global Business Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Georgia Ports Authority, United States
- Sindya Power Generating Company Private Ltd
- CIMB Investment Bank - Malaysia
- Samtan Co., Ltd - South Korea
- Australian Commodity Traders Exchange
- Bukit Baiduri Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Latin American Coal - Colombia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Binh Thuan Hamico - Vietnam
- Coal and Oil Company - UAE
- Merrill Lynch Commodities Europe
- Indian Oil Corporation Limited
- SMC Global Power, Philippines
- Semirara Mining and Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Kaltim Prima Coal - Indonesia
- Ambuja Cements Ltd - India
- South Luzon Thermal Energy Corporation
- Altura Mining Limited, Indonesia
- Cement Manufacturers Association - India
- Bhushan Steel Limited - India
- Electricity Authority, New Zealand
- Karbindo Abesyapradhi - Indoneisa
- San Jose City I Power Corp, Philippines
- IEA Clean Coal Centre - UK
- Aditya Birla Group - India
- International Coal Ventures Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PowerSource Philippines DevCo
- Electricity Generating Authority of Thailand
- Bayan Resources Tbk. - Indonesia
- Timah Investasi Mineral - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- Independent Power Producers Association of India
- Kepco SPC Power Corporation, Philippines
- ASAPP Information Group - India
- Banpu Public Company Limited - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Electricity Authority - India
- Edison Trading Spa - Italy
- Dalmia Cement Bharat India
- Interocean Group of Companies - India
- Formosa Plastics Group - Taiwan
- Marubeni Corporation - India
- Vedanta Resources Plc - India
- Indika Energy - Indonesia
- Wood Mackenzie - Singapore
- The Treasury - Australian Government
- Kohat Cement Company Ltd. - Pakistan
- Krishnapatnam Port Company Ltd. - India
- Vizag Seaport Private Limited - India
- Mercator Lines Limited - India
- Makarim & Taira - Indonesia
- Central Java Power - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- OPG Power Generation Pvt Ltd - India
- Ministry of Transport, Egypt
- Sical Logistics Limited - India
- Gujarat Electricity Regulatory Commission - India
- Thai Mozambique Logistica
- Coastal Gujarat Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- Sojitz Corporation - Japan
- Pendopo Energi Batubara - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- Singapore Mercantile Exchange
- The State Trading Corporation of India Ltd
- Mintek Dendrill Indonesia
- London Commodity Brokers - England
- Tamil Nadu electricity Board
- Leighton Contractors Pty Ltd - Australia
- Parry Sugars Refinery, India
- Parliament of New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- MS Steel International - UAE
- Commonwealth Bank - Australia
- Grasim Industreis Ltd - India
- Xindia Steels Limited - India
- Madhucon Powers Ltd - India
- Australian Coal Association
- GAC Shipping (India) Pvt Ltd
- Orica Mining Services - Indonesia
- Star Paper Mills Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Maheswari Brothers Coal Limited - India
- Gujarat Sidhee Cement - India
- Siam City Cement PLC, Thailand
- Chamber of Mines of South Africa
- Intertek Mineral Services - Indonesia
- Planning Commission, India
- Bahari Cakrawala Sebuku - Indonesia
- Kumho Petrochemical, South Korea
- Alfred C Toepfer International GmbH - Germany
- McConnell Dowell - Australia
- Essar Steel Hazira Ltd - India
- Jindal Steel & Power Ltd - India
- Indogreen Group - Indonesia
- VISA Power Limited - India
- Attock Cement Pakistan Limited
- Karaikal Port Pvt Ltd - India
- Meralco Power Generation, Philippines
- Price Waterhouse Coopers - Russia
- Wilmar Investment Holdings
- Directorate General of MIneral and Coal - Indonesia
- GVK Power & Infra Limited - India
- White Energy Company Limited
- Energy Link Ltd, New Zealand
- Sakthi Sugars Limited - India
- Indian Energy Exchange, India
- Kapuas Tunggal Persada - Indonesia
- Heidelberg Cement - Germany
- Neyveli Lignite Corporation Ltd, - India
- Goldman Sachs - Singapore
- Antam Resourcindo - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GN Power Mariveles Coal Plant, Philippines
- Kideco Jaya Agung - Indonesia
- Mercuria Energy - Indonesia
- Ministry of Finance - Indonesia
- Tata Chemicals Ltd - India
- Sree Jayajothi Cements Limited - India
- Aboitiz Power Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Indonesian Coal Mining Association
- CNBM International Corporation - China
- Anglo American - United Kingdom
- SN Aboitiz Power Inc, Philippines
- Salva Resources Pvt Ltd - India
- Malabar Cements Ltd - India
- Romanian Commodities Exchange
- Uttam Galva Steels Limited - India
- Manunggal Multi Energi - Indonesia
- Power Finance Corporation Ltd., India
- Eastern Energy - Thailand
- Carbofer General Trading SA - India
- Gujarat Mineral Development Corp Ltd - India
- Indo Tambangraya Megah - Indonesia
- Riau Bara Harum - Indonesia
- Directorate Of Revenue Intelligence - India
- Kobexindo Tractors - Indoneisa
- The University of Queensland
- Bhatia International Limited - India
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